NADA Challenges the FTC’s New Advertising and F&I Rules
The National Automobile Dealers Association has challenged the Federal Trade Commission's proposed rules on dealership advertising and finance and insurance.

FTC
The National Automobile Dealers Association (NADA) has challenged the Federal Trade Commission's (FTC’s) proposed rules on dealership advertising and finance and insurance.
NADA claims the disclosures are unsupported, sloppy and inconsistent in regulating the industry, while the FTC believes the proposals are solid, backed by research, studies and past enforcement actions.
The agency's justification for the rule changes is "woefully inadequate," Paul Metrey, NADA senior vice president of regulatory affairs told Automotive News. Regulation is meant to fill a hole in the law, but in this case, "it's things they can go after" already, he said.
The FTC maintains their research shows bait-and-switch tactics and junk fees in the industry. The FTC can target such tactics under the Truth in Lending Act and other prohibitions to unfair and deceptive practices.
But others say these concerns are unwarranted. For instance, NADA estimates 42 million new and used vehicles were sold to consumers in 2021, while Cox Automotive puts that number at 34.2 million. When compared to either sales tally, auto complaints add up to less than half a percent of all transactions.
The FTC also drew upon comments from qualitative research conducted in 2017 to draft the proposed rules.
But NADA reports this research does not contain statistically significant data found in quantitative research. The research involved interviews with just 38 borrowers who bought new or used vehicles in the Washington, D.C., area.
The FTC claims over 50 enforcement actions also justify the new rule. These actions targeted "matters involving misleading motor vehicle advertising, financing paperwork falsification, 'yo-yo' financing, deceptive and unfair add-on fees, discrimination, and privacy and data security issues,” according to the FTC.
But only three claims actually involved voluntary protection products which comprise the bulk of FTC's proposed rules.
The FTC also cited operations with other law enforcement agencies that produced 246 punitive actions. But these numbers are inflated, according to NADA.
NADA will examine the costs the proposed regulation would impose upon dealerships. The FTC puts this figure at $1.36 billion to $1.57 billion over a decade.
Andrew Koblenz, NADA executive vice president of legal and regulatory affairs, has criticized the FTC's estimate of the corresponding benefit to society over that time. The agency forecast $31.08 billion to $36.34 billion in gains from consumers needing three fewer hours to shop for a vehicle, with an hour valued at $22.20.
NADA has called the source of that three-hour calculation into question.
NADA maintains the FTC hasn't studied the effectiveness of its proposed solutions. Previous examples of such research by the Federal Reserve Board and the FTC found disclosures confused consumers agencies sought to help.
NADA finds the rules also fail to capture the entire industry, suggesting they apply only to the franchised and independent dealerships over which the FTC has jurisdiction, not independent dealerships regulated by the Consumer Financial Protection Bureau (CFPB). This means the FTC made the new rules without conducting joint rule-making with the CFPB.
The FTC maintains enforcement and research supported its proposal.
NADA seeks to extend the public comment window, which opened Wednesday, July 13, to Sept. 12.
More Dealer Ops

Dealer Debrief: Defection Data & EV Updates
In this week's debrief, host Lauren Lawrence discusses how to use defection data to your advantage and the latest on EV sales and charging infrastructure.
Read More →
How Defection Data is Bridging the Dealership Conversion Gap
Lead volume is flat, cross-shopping is up and brand loyalty is in retreat. As confident sales teams keep losing buyers they thought they had, daily industry sales data is showing dealers exactly where their funnel is breaking and how to fix it without buying a single new lead.
Read More →
Dealer Debrief: Where are you losing customers?
In this week's debrief, host Lauren Lawrence discusses the hidden leaks in dealerships where you might be losing customers without even realizing it.
Read More →
Dealer Debrief: Improving Your Inventory Management
In this week's debrief, host Lauren Lawrence covers a new survey that shows what service technicians really want and two launches that could help improve your inventory and vehicle life cycle management.
Read More →
Ladies and Gentlemen, This Is a Dealership: Why the Fundamentals Still Decide Who Wins
A teaching moment by a legendary football coach happens to apply perfectly in the auto retail space. Learn what it is and how to use it to your store’s advantage.
Read More →
What Market Timing Mistakes Mean for Your Reinsurance Program
When volatility hits, dealer-owned reinsurance programs face a familiar temptation: pull back and wait for calmer waters. New data from BOK Financial shows why that instinct can quietly cost you years of surplus growth.
Read More →
Dealer Ads and the FTC
The agency has made it clear in recent enforcement actions and warnings, in auto retail and other industries, that advertised prices must include all nonoptional costs to the consumer.
Read More →
Used Autos Supply Dwindles
The March shopping surge, despite high prices, cut into inventory by the most since the thick of the pandemic, Cox Automotive analysts calculated.
Read More →
Managing Risk Effectively Through Changing Times
The variables influencing risk pricing have changed significantly over the past five years. Being proactive and responsive to emerging trends is not optional but essential.
Read More →
Survey Reveals What Won't Fix What's Breaking Car Sales
AutoPayPlus says extra-long auto loans are trapping consumers and threatening the dealer trade-in cycle, and that the industry is leveraging the wrong tools to combat high MSRPs.
Read More →
